Footsteps to Follow in the Coming Year

Friday

A column that catches up with people who faced financial turning points in 2011.

One of the best, most revelatory money maxims is one that comes from Tim Maurer, an author, radio host and financial planner in Hunt Valley, Md.

Personal finance is more personal than it is finance.

Strip away the numbers and the returns and the 50-page financial plans, and what you’re left with is people and all of their associated baggage. It is their raw emotions — fear, greed, guilt — that drive most financial decisions for better or (frequently) for worse.

So this column is by the people — the most interesting ones who turned up in the Your Money column and the stand-alone reports we co-produced with American Public Media’s Marketplace Money radio show in 2011.

And it’s for the people who have set a personal goal in 2012 to do just a bit more to keep their emotions in check and their money under control.

This is how some of those characters from columns past intend to do it.

DEBT When we last met Mino Caulton, a 19-year-old in Shutesbury, Mass., he was weighing financial aid offers from a variety of expensive universities. He ultimately decided to attend none for the foreseeable future.

Though his family was able to demonstrate a great deal of need during the financial aid application process, even the local state university was going to cost them $2,000 out of pocket and require $7,000 in student loans in Year One.

“I heard that and got this aching, stabbing pain in my forehead,” he said. “I definitely think it’s a stupid idea to get into debt when I don’t have to.”

Rather than blindly following his high school classmates heading immediately to college, he spent much of 2011 focusing on two areas of career interest. He works for his local fire department and recently completed his probationary period. And he coached a local soccer team. In the spring, he hopes to take an emergency medical technician course at the local community college, which would cost him nothing; he qualifies for free tuition.

Mr. Caulton knows that to advance in coaching in particular, he’ll probably need a college degree. But he’s in no rush to get one, especially if it means putting himself five figures in the hole. More high school graduates should be thinking precisely as he does, testing their career interests, dipping a toe in community college and living at home to keep debt at a minimum.

UNEXPECTED EXPENSES For people who do graduate with debt, being mindful of expenses is crucial.

Michaela Fortin, 22, is one of the luckiest recent college graduates in that respect. She has a job as a sales and marketing coordinator for the Middlebury Inn in Middlebury, Vt., that allows her to afford her $320 in monthly loan payments. And she has training, having worked as senior peer adviser at her alma mater, Champlain College in Burlington, Vt., as part of the college’s personal finance training program, which every student must complete.

What she didn’t have until this year, however, was much real-world experience. And it was a bit like having cold water splashed in her face. “Being unable to predict the unexpected has been the biggest challenge,” she said.

There were big things, like the need for a car, which then needed new tires. And little things, like the fees for the birth certificate and a replacement Social Security card she needed to start her job.

So far she has managed, thanks in part to money that she’s earned picking up extra work as a freelance graphic designer. But she doesn’t want to rely on that budget padding either.

So she plans to use a trick that she picked up in her Champlain training, automating her accounts so that money is locked away for the future, or the unexpected, before she even sees it in her checking account.

“I want to budget for savings, saving before I have the money,” she said, in effect tricking her mind into thinking that the money was never available for everyday spending in the first place.

BETTER HALVES To be an entrepreneur is to break many of the rules of personal finance. It means making a big bet. It can mean a lot of credit card debt, too, as Mike Alfred discovered. He is a co-founder of BrightScope, a company that ranks and provides data on 401(k) plans and investment advisers, and he recently finished paying off about $50,000 of that debt.

It can also mean blowing off retirement savings for a while. Putting away $10,000 a year is fine, but most people in start-ups figure it’s best to put all their available cash into the business in the hope they can sell it later for enough to retire on right then and there.

Here, Mr. Alfred diverts from the standard all-in strategy as he recently began saving in his own company’s retirement plan. In one sense, this may be about perceptions — it might not look so good if Mr. 401(k) was not participating in his own retirement plan.

But Mr. Alfred, 30, chalks this up to something else — the fact that his girlfriend moved to San Diego this year so the two could move in together. “When you get older, you may have a spouse or significant other that is more conservative than you,” he said. “And you need to make sure that they feel comfortable building a relationship with a risk-taker. It is a little bit of a compromise, and she convinced me to start again.”

Alan Wenker, the 48-year-old controller in Maplewood, Minn., who spent a decade hunting for a better 401(k) plan for himself and his co-workers, plans to spend part of 2012 putting things in better order in the event that he dies unexpectedly.

“My wife could find all of the stuff she needed by digging around in a file cabinet and piecing it all together,” he said. “But it really shouldn’t be something that should be that hard to get.”

So he’s committing to making a better just-in-case spreadsheet in 2012, one with all of the relevant accounts and phone numbers on it. “These are the easiest things in the world to put off,” he said.

TIME Kathleen Rehl, 64, a financial planner in Land O’Lakes, Fla., has devoted much of the latter part of her professional life to helping women who have already lost their spouses. In 2012, she plans to redirect her time so that she can reach many more people than the 55 or so clients she regularly works with.

Time is money, true, but how you spend that time also contributes to your overall happiness. So she will meet with her clients twice instead of three times and help them via phone at other times, as needed.

Then, she’ll spend some of that extra time doing a couple of things.

First, she’s training formally as a public speaker to get better at spreading the word to fellow widows. (She lost her husband in 2007.)

She’s also diverting profits from the book that she self-published, “Moving Forward on Your Own: A Financial Guidebook for Widows,” to support others like her. Among other things, she’s helping to pay for one person a year to attend a “camp” for new widows and creating partial scholarships for widows training to be Lutheran ministers.

CHILDREN It is hard to say no to your children, especially bright and ambitious teenagers with potentially enriching, but incredibly expensive, educational goals.

For Mr. Wenker, it’s the desire of his eldest child to study abroad while still in high school, before college tuition bills even hit, that inspired another goal for next year.

What he realized was that the bill for this, if she ultimately decides to go, could allow for a teaching moment for both of his children.

He is a bit of a thrift shop junkie, and there are many good ones near his office.

Meanwhile, for years, he’s been collecting vintage backpacking equipment and has a basement stuffed full of it.

So the plan for 2012 is to make a family business of selling some of some of his finds on eBay.

The children can do the photography. He’ll write the listings, and his wife can handle shipping. “The kids will get some idea of what it takes to do these things, to start a spreadsheet showing revenue and going from there,” he said, figuring that the family could clear $5,000 or more for the overseas tuition if everyone is reasonably diligent.

“Then all we have to do is drop her off at the airport and sob uncontrollably,” he said. “Other than the heartache, it’s all manageable.”

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.